Pasadena City Council members voted Monday to give themselves and many city workers a 3% salary increase next year, offsetting pension reforms that will cost municipal employees but save taxpayers hundreds of thousands of dollars.
Two council members applauded the pension reforms but voted against the pay increase for council members. Council members last gave themselves a raise since 2009.
Participants in the California Public Employee Retirement System must pay 8% of their salaries into the system, but for years Pasadena and other public agencies have tapped city coffers to cover much of those costs.
Council members, department managers and many other city employees currently pay 3.6% of their salaries into the public retirement system, according to documents. Starting next year, they will pay the full 8%.
The 3% raises are designed to offset the new payroll deductions, said city spokesman William Boyer.
Because retirement contributions are not taxed, employees won’t notice much of a difference on their checks. But the reduction in what the city must pay out in benefits really adds up, City Manager Michael Beck told council members.
The city is projecting a savings of $226,000 in the next fiscal year.
“This is a fundamental shift in pension reform that makes public sector employees in Pasadena responsible for their retirement costs,” said city spokesman William Boyer. “In the decades to come, the accumulated savings will be potentially in the hundreds of thousands if not millions of dollars.”
Councilman Steve Madison lobbied for city leaders to adopt pension changes without increasing their own pay.
Councilman Gene Masuda joined Madison in a protest vote that resulted in a 6-2 split.
“I can’t support giving ourselves a raise this year when we’ve laid off employees,” said Madison. “I know [the amounts] are immaterial against the General Fund budget, but I think symbolically it sends the wrong message.”
Pasadena cut 14 employees in March to shave $1.8 million in annual costs. Since 2009, officials have cut nearly 300 positions by not replacing retired workers and eliminating unfilled jobs.
Pasadena City Council members are paid $1,367.56 per month, and the mayor earns monthly checks of $2,051.29, said Boyer.
City Clerk Mark Jomsky said Pasadena has saved a total of $15,000 over four years by council members giving up scheduled cost-of-living increases.
Councilwoman Margaret McAustin said shifting retirement payment obligations back to employees would create “an enormous structural savings for the city” in perpetuity.
Council members, she said, are “doing exactly what we’re asking our employees to do.”